The House passed legislation Friday aimed at preventing mandatory arbitration in consumer and employment contracts in a 225-186 vote that generally fell along party lines.
The Forced Arbitration Injustice Repeal Act of 2019, or FAIR Act — spearheaded by Rep. Hank Johnson (D-Ga.) — would also ban limits on class action lawsuits.
Democrats backing the bill argue it places more power in the hands of consumers and is a critical step in holding businesses accountable for their actions, products and services.
“The FAIR Act would restore justice to millions of Americans,” Johnson said during the floor debate.
“We’re a country of justice and fair play. When people cheat, we take pride in holding them accountable before a jury in a court of law, but forced arbitration clauses hidden in the fine print deprive victims of their day in court before a jury of their peers,” he said.
He said forced arbitration allows corporations to use “secret proceedings” that put their opponents at a disadvantage.
“Predictably, the end result is the corporation wins and the victim is deprived of justice,” Johnson said. “Because the proceeding is secret, the public never learns what happened.”
Critics of the bill said the legislation would fail to prevent abuse, arguing arbitration provides consumers with a “simpler, cheaper, faster path” than the judicial system in settling consumer and employment disputes.
“Even the Consumer Financial Protection Bureau’s 2015 study of arbitration highlighted problems consumers would face if they had no access to arbitration, but instead had to rely on flawed judicial class actions,” Rep. Doug Collins (Ga.), the ranking Republican on the House Judiciary Committee, said during the debate.
“The study showed the rise of pre-dispute, mandatory binding arbitration agreements in consumer settings did not come out of nowhere. It stems directly from the repeated abuses of class actions that have plagued the judicial system in recent decades,” he said. “That is not to say the arbitration system is perfect, but the arbitration system is generally good and should be preserved.”
The bill is likely to see little movement in the Republican-controlled Senate.
Just two Republicans in the House backed the bill: Reps. Matt Gaetz (Fla.) and Chris Smith (N.J.). Reps. Henry Cuellar (Texas) and Collin Peterson (Minn.) were the only Democrats to vote “no.”